The 2014 Obama budget has been garnering plenty of attention from the press, but how could it affect your residential real estate business?

Well, it’s that time of the year!

Oh yes, the nation’s capitol has begun the early stages of its budgetary brawl, the messy process when the White House, Senate and House of Representatives all attempt to reconcile their differences and reach an agreement on the government’s operating budget.

President Obama released his budget last week, and it has generate the expected buzz from analysts and media figures alike. Amidst all the media coverage and political hoopla, though, how will the president’s budget actually affect ordinary Americans? And more importantly, how will it affect real estate?

As real estate professionals, here are three things you should consider about the Obama budget:

1. It Would Change The Tax Laws in Major Ways – As he’s done every year since taking office, Obama is recommending that caps be placed on the value of itemized deductions, which would, of course, affect the hugely popular mortgage interest tax deduction. Though his earlier suggestions have never moved past the proposal stage, the president’s current budget would limit deduction values to 28 percent for households in the 33, 35 and 39.6-percent tax brackets.

Also, the taxation of estates would, beginning in 2018, revert back to 2009 levels; as part of the “fiscal cliff” negotiations, the first $5 million in individual estates and $10 million for couples were exempt from the estate tax, but if returned to 2009 rules, the exemption would drop to $3.5 million and the estate tax rate would increase from 40 percent to 45 percent.

2. It Would Extend the Mortgage Forgiveness Debt Relief Act – On a much sunnier note, the Obama budget would also extend the Mortgage Forgiveness Debt Relief Act through 2015. One of the government’s more popular housing initiatives, the Act exempts forgiven debt in short sales from taxable income; during fiscal cliff talks, though, the act was only extended through the end of this year, and considering how long short sales often take to close, the clock is fast ticking on extending the act.

3. It Would Further Expand HARP – Home Affordable Refinance Program (HARP) has been, without a doubt, the government’s most successful program in response to the housing downturn, but even with its huge popularity among consumers (the FHFA recently extended it through 2015), its reach remains limited to homeowners with Fannie Mae/Freddie Mac-guaranteed loans from before June 2009. The Obama budget would make HARP available to underwater borrowers without federally-guaranteed mortgages.